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Cenvat Utilisation

MAHENDRA LAD (Service) (112 Points)

02 August 2010

I have query about the discharge of Service Tax Liability period prior to 01.04.2008. We have received the notice from the dept for payment of service tax liability for old period 2006-07 & 2007-08. We have a balance of Cenvat Credit in books. Can we discharge this liability through cenvat utilisation of 100% or by 20-80%. i.e 20% by cenvat and 80% by cash.Pls advice.

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Rineesh Raghavan (MD) (108 Points)
Replied 04 August 2010

Hi Mahendra

Generally, all the duty payments separately demanded are to be paid only by CASH. You cannot utilize the CENVAT Credit for payment of such dues. In fact, there is a clear provision for different, but similar situation. Wrong utilisation of CENVAT Credit. You cannot just reverse later. You are supposed to pay it by cash along with interest, even if you had adequate other CENVAT Credit.

So, you Credit possible in your case. Pay it by cash along with interest.

Rineesh